So, you’ve just sold your home, and that money is burning a hole in your bank account. You want a way to feel good about how you have invested or spent the proceeds from the sale of your home.

There are so many options that you get analysis paralysis at the mere thought of what your next move should be. Relax and take a deep breath, because we will give you three ways you can wisely use the proceeds from your home sale.

Some Things to Consider First

Countless scenarios involve a person that is looking at how to use their post-sale proceeds wisely. The answer boils down to how much they have to spend and what is most important to them at the moment. Here are some things to think about before deciding how to spend your profits:

  • What is your tax liability? – Taxes are inevitable when you sell a property. Take into consideration exactly what your tax liability is—consult your tax accountant if you need assistance. Also, consider the cost of selling a house. Set the money need to pay the taxes aside.
  • What is Your Profit Margin? – You need to think about how much your net profit from the sale is and what it can accomplish. In other words, find out what you can afford.
  • What are Your Future Financial Obligations? – Think about your financial needs over the next 2, 5, and ten years. What are your goals for your future? Do you have an ultimate investment plan?
  • What are Your Sentiments on the Current State of the Economy? – How do you feel about the current economic climate? Is this a climate that has you feeling more hopeful or cautious when you think about investing?

1.  Use Funds for the Down Payment on Another Home

One of the most obvious answers is using your proceeds to purchase another home as a residence or as an investment vehicle. As long as you have 10% of the sale price, a lender will fund an owner-occupied borrower with approved credit. Investors can pay cash or find a hard money lender to help support the deal.

2. Invest Your Proceeds

Are you positive about the current financial climate? Do you feel bullish (positive) or bearish (negative) about the near future of the investment markets and instruments available to investors? If so, consult with a licensed financial advisor to get advice about your investment options.

3. Use the Proceeds to Pay Down Debt

Paying down debt is never a bad idea. When you are paying down credit card debt or any debtor that reports to the credit reporting agencies monthly, make sure to get the most out of your payments. Instead of paying off your debts with one lump sum, pay it off over a series of months so you can benefit from paying timely monthly.

Conclusion

Having a windfall of cash and not knowing what to do next is a pretty good problem to have. Your curiosity about wanting to know what to do to spend it wisely means that there is a good chance that you will do the right thing. Do your due diligence and research before deciding what the best way to spend your proceeds will be.